Private equity investment into mining already at $1.76bn through 61 deals in first half of 2015

International law firm Berwin Leighton Paisner (BLP) has today (3 August) released a report revealing in the first half of 2015 over $1.76bn of private equity funds were invested in equity in mining projects globally. Furthermore, there were 61 reported investments in the first half of 2015, up from a total of 50 reported in the whole of 2014.

The report highlights that the momentum seen in 2014, where over $2bn was invested, has continued into the first half of 2015.

However, with falling commodity prices and tough equity markets for commodity companies, the report revealed that one in six of the investments involved refinancing or rescue. In addition, nearly 21% of investments were coupled with exposure to the commodity e.g. royalties or stream or right to product. This is an interesting development which suggests that, in these markets, equity returns alone are not sufficient for PE funds.

Geographically, the report shows that North America still saw the most deals being completed, with 12 investments in companies based in Canada and a further 11 into the USA. Africa, South America and Australia all saw the number of deals executed increase, with Australia rising from five in the whole of 2014 to nine already in the first half of 2015. Europe saw the largest deal amount in the first six months of the year, with four deals totalling over $1bn, up from $173.2m in 2014.

Other key findings with regards to commodities included:

  • Gold was still the most popular commodity with 29 investments already, up from 15 in 2014
  • Copper then followed with eight investments, more than doubling its 2014 deal amount of three
  • Nickel came third with six deals in 2015, replacing coal in the top three deals

Alexander Keepin, Partner and Co-Head of Mining at BLP, said: “The data shows that even with the commodity market in flux, the momentum which began in 2014 has continued into the first half of 2015 with over $1.76bn of private equity funds being invested. If the trends we have seen continue throughout the rest of the year then we will see nearly double the amount invested in 2015 compared to 2014.”

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